Delhi Epdp Cooperative Group ... vs Registrar Cooperative Societies ...
2015 Latest Caselaw 4435 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
                                  Judgment delivered on: May 29 , 2015.
+      W.P.(C) 1746/2014
       DELHI EPDP COOPERATIVE
       GROUP HOUSING SOCIETY LIMITED            ..... Petitioner
                     Through Mr. Rakesh Munjal, Sr. Advocate
                             with Mr. Ankur Arora and Ms.
                             Srishti Sharma, Advocates
                     versus
       REGISTRAR COOPERATIVE SOCIETIES
       AND ORS                                    .....Respondents
                    Through: Ms. Farida Seetarawala, Advocate
                               for R-1.
                               Mr. Sandeep Kumar, Advocate for
                               Mr. B.L. Jana, R-3.
       CORAM:
       HON'BLE MR. JUSTICE KAILASH GAMBHIR
       HON'BLE MR. JUSTICE I.S.MEHTA

                              JUDGMENT

%

KAILASH GAMBHIR, J.

1. The present Writ Petition has been preferred by the petitioner under

Articles 226 and 227 of the Constitution of India, to seek a writ of

certiorari for quashing /setting aside of the order dated 03.03.2014 passed

by the learned Delhi Cooperative Tribunal, Govt. of NCT of Delhi

(hereinafter referred to as the 'learned Tribunal') in Appeal

No.99/2012/DCT whereby the learned Tribunal has remanded the case to

Respondent No.1 for deciding the case afresh and for holding, declaring

and directing that the expulsion of Respondent No.3 is deemed to have

been approved.

2. The petitioner is a Co-operative Group Housing Society Limited

(hereinafter referred as the 'Petitioner Society') duly registered under the

Delhi Cooperative Societies Act, governed by the provisions of Delhi

Cooperative Societies Act, 2003(hereinafter referred to as the 'Act'), the

Delhi Cooperative Societies Rules, 2007 (hereinafter referred to as the

'Rules') and its registered Bye-laws. The Respondent No.1, Registrar

Cooperative Societies is a statutory authority created under the provisions

of Delhi Cooperative Societies Act, 2003, Respondent No. 2 has been

appointed Special Registrar to implement the provisions of the Delhi

Cooperative Societies Act, 2003 and rules framed thereunder and

Respondent No. 3, Sh. Bimal K. Jana was a member of the Petitioner

Society and was expelled by the Petitioner Society vide resolution dated

17.07.2011.

3. The Petitioner Society took a stand that Respondent No.3 was

liable to be expelled as he has committed various acts detrimental to the

interests of the Petitioner Society, so the proceedings to expel him were

initiated under Section 86 (1) of the Act. The Respondent No. 3 was

served with three notices dated 14.10.2010 , 23.11.2010 , 26.01.2011 at

an interval of 30 days each whereby he was confronted with the grounds

of expulsion as per section 86(1) proviso 1 of the Act read with rule 99(1)

of Rules. Final Show Cause Notice dated 26.01.2011 was also served

upon the said Respondent providing an opportunity for personal hearing

after the issuance of last & final notice of 26.01.2011 on 10.04.2011 after

a lapse of 75 days.

4. The said Respondent was duly informed about the meeting of the

Managing Committee to be held on 10.04.2011 and the same was

attended by him. On 17.07.2011 Managing Committee of the Petitioner

Society unanimously decided to expel Respondent No. 3 as per section

86(1) of the Act. Thereafter, the Petitioner Society submitted the

expulsion dossier dated 12.08.2011 to the office of the Respondent No.1

on 16.08.2011 within 30 days from the date of expulsion, seeking its

approval in terms of Section 86(2) of the said Act. Respondent No.3

wrote to the registrar vide letter dated 25.10.2011 requesting for early

action in the matter of expulsion lest the approval would be considered as

deemed to have been granted after 180 days w.e.f 16.08.2011 i.e. the date

of filling reference. Special Registrar, i.e. Respondent No.2 issued the

first notice on 12.01.2012 to both the parties for appearance on

19.01.2012 which was received by the Petitioner Society on 17.01.2012.

Respondent No.2 being bound to take cognizance of the expulsion

resolution within 30 days from the receipt of the resolution for expulsion

as per section 86(3) of the said Act did not take cognizance within the

said period and issued a notice only after five months.

5. On 19.01.2012, both parties had appeared before the Special

Registrar, Respondent No.3 asked for an adjournment to file a reply to the

expulsion dossier and sought for a longer date on the ground that he had

to go to Kolkata and produced a train ticket to support his plea that he

was travelling from 11.2.2012 to 22.2.2012. The Petitioner Society

requested for a date in January or in the first week of February but

Respondent No.3 insisted for a date in March as he was travelling.

Respondent No.2 gave a date of 01.03.2012 in order to accommodate

respondent No.3 thereby the Petitioner Society took time for filling

Vakalatnama. Respondent No.3 vide letter dated 06.02.2012 alleged that

certain documents /signatures were incomplete or missing in the said

dossier issued by the Petitioner Society when infact a complete set of

documents/ signatures were provided to the said Respondent and the

same was intimated to him vide letter dated 11.02.2012. Meanwhile, the

Petitioner Society, as contemplated by the section 86(3) of the Act read

with rule 99(3) of the Rules took a stand on 01.03.2012 that the resolution

of the Petitioner Society to expel Respondent No.3 has been deemed to be

approved by Respondent No.1, since 180 days ended on 13.02.2012. The

Petitioner Society vide letter dated 18.02.2012 intimated respondent

Nos.1, 2, 3 regarding expulsion of respondent No.3. The Petitioner

Society contended that Respondent No.2 had become functus officio in

terms of the Act and this hearing fixed by Respondent No.2 is beyond the

statutory period of 180 days. Respondent No.3 submitted detailed reply

on 01.03.2012 against each of the allegations mentioned in the various

show cause notices, to the Petitioner Society as well as to the Special

Registrar. Respondent No.2 held a hearing on 20.03.2012 without giving

knowledge or notice to the society and issued a notice dated 22.03.2012

to the Petitioner Society fixing the date of hearing on 29.03.2012 to

which the Petitioner Society sent a letter dated 28.03.2012 whereby an

objection was raised regarding the powers of Respondent No.2 regarding

continuation of proceedings after expiry of 180 days which the staff of

the said respondent refused to accept, and which was later tendered to the

Special Registrar through speed post with comments and a copy on

29.03.2012. The Petitioner Society did not attend hearings before

Respondent No.2 but submitted vide letters dated 18.02.2012,

27.02.2012, 01.03.2012, 28.03.2012, 29.03.2012 that their absence was

due to the Respondent No.2 becoming functus officio. Respondent No.2

vide order dated 10.04.2012 rejected the petition of the Petitioner Society

seeking approval of expulsion of Respondent No. 3 without assigning any

reason. The said order did not give any reasons of the purported hearing

beyond the expiry of the period of 180 days which deprived Respondent

No.2 of any power whatsoever to conduct any proceedings on the deemed

expulsion served upon Respondent No.3.

6. The Appellant Society then approached this Court vide Writ

Petition (Civil) No. 2874/2014 in the first instance impugning the order of

Respondent No. 2. However, the said Writ Petition was withdrawn with

the liberty to approach the Delhi Cooperative Tribunal vide order dated

15.05.2012. The learned Tribunal vide order dated 03.03.2014 set aside

the order of Respondent No.2 dated 10.04.2012 and remanded the case to

Respondent No.1 for deciding the case afresh. The learned Tribunal also

held that the computation of period of 180 days shall begin from

18.03.2014.

7. The main issue involved in the present Writ Petition is whether the

period of 180 days provided under Section 86 (3) of the Act read with

Rule 99 (3) of the Rules for passing a final order by the Registrar either

approving the expulsion or rejecting the proposal for expulsion is a

mandatory period or is directory in nature as the same entails deemed

expulsion of a member if the matter is not decided by the Registrar within

the said period. Another collateral issue raised in the Petition is whether

the learned Tribunal could have given direction to the Registrar by

determining as to when the period of 180 days in respect of expulsion

proceedings should begin as contrary to section 86 (3) of the said Act and

Rule 99 (3) of the said Rules.

8. Mr. Rakesh Munjal, the learned Sr. Counsel for the petitioner

submitted that the Authorities below failed to appreciate that it was

obligatory upon respondent No.1 to decide the case of expulsion and pass

an order within a maximum period of 180 days from the date of receipt of

the reference and failure to do so would amount to deemed expulsion in

terms of section 86 (3) of the said Act read with Rule 99 (3) of the said

Rules. The learned Sr. Counsel further submitted that the Authorities

below also failed to appreciate that respondent No.3 was expelled by the

Petitioner Society on 17.07.2011 in the meeting of its Managing

Committee in accordance with law and thereafter a case of expulsion of

respondent No.3 was referred to respondent No.1 for approval on

16.08.2011 within the prescribed period of 30 days from the date of

passing of the resolution as provided under Section 86 (3) of the said Act.

The learned Sr. Counsel also submitted that after having received the said

resolution from the Petitioner Society, it was incumbent upon respondent

No.1 to take cognizance of the said resolution within a period of 30 days

and then to pass a final order of either approving the resolution for

expulsion or rejecting the same within the upper limit of 180 days as

prescribed under law and if it is not done so within the said period of 180

days then the expulsion has to be taken as deemed to have been approved

by the Registrar Society. The learned Sr. Counsel also argued that the

learned Tribunal has no jurisdiction to determine as to when the period of

180 days in respect of expulsion proceeding should begin. Under Section

86 of the Act read with Rule 99 of the Rules, it is specifically provided

that the said period of 180 days shall begin from the date of filing of the

reference to the Registrar Cooperative Societies, therefore, direction

given by the learned Tribunal stating that the computation period of 180

days shall begin from 18.03.2014 is absolutely illegal and contrary to law.

Based on these submissions, the learned Sr. Counsel strongly urged for

setting aside the impugned order passed by the learned Tribunal and a

declaration that the expulsion of respondent No.3 is deemed to have been

approved.

9. We have heard the learned counsel for the parties at considerable

length and have given our conscious consideration to the arguments

advanced by them.

10. Before we embark and deal with the controversy at hand, it would

be relevant to reproduce Section 86 of the said Act and Rule 99 of the

said Rules as under:

"Expulsion of a member.

86. (1) Notwithstanding anything contained in this Act and the rules framed thereunder, the committee of a co-operative housing society may, by a resolution, expel a member on any one or more of the following grounds, namely - (a) if he has been a persistent defaulter in respect of any dues of the co- operative housing society; or

(b) if he has wilfully deceived the co-operative housing society by making any false statement or submitting any false document to obtain the membership of such co-operative society; or

(c) if he has brought disrepute to the co-operative society or has done any other act detrimental to the interest and proper working of the co-operative society : Provided that no such

resolution shall be passed unless the member concerned has been given an opportunity of being heard after service of three registered notices confronting the member with the grounds for his proposed expulsion : Provided further that no member shall be expelled unless a resolution to that effect is passed by not less than three-fourths of the members of the committee present and entitled to vote at the meeting and no resolution for expulsion shall be valid unless approved by the Registrar. (2) After the resolution for expulsion is passed as above by the committee, the resolution shall be referred to the Registrar for approval within a period of thirty days.

(3) On the receipt of the resolution for expulsion, the Registrar shall take cognizance of such resolution within thirty days and pass a final order either approving the expulsion or rejecting the proposal for expulsion within a period of one hundred and eighty days and if the matter is not decided by the Registrar within the aforesaid period, the expulsion of such a member shall be deemed to have been approved : Provided that the Registrar, before approving the resolution, shall hear the parties concerned in the manner prescribed and shall have power to summon and enforce attendance of witnesses including the parties interested or any of them and compel them to give evidence on oath, affirmation or affidavit and to compel production of documents by the same means and as far as possible in the same manner as provided in the case of a civil court under the Code of Civil Procedure, 1908 (5 of 1908) and the order under this section so passed by the Registrar, shall be final with a right for appeal before the Tribunal. (4) Any party aggrieved by the order of the Registrar or deemed approval of expulsion, as the case may be, under sub- section (3) may, within sixty days from the date of such order, appeal to the Tribunal"

"99. Expulsion of a member (1) The cooperative housing society may in accordance with the provisions of sub-section (1) of Section 86, expel a member. However, before passing a resolution for expulsion of the member, the committee shall have to deliberate the case of expulsion in the committee's meeting and shall have to approve the proposal for issue of notice for the expulsion of a member setting out therein full details of the grounds with supporting documents In all at least three registered notices shall be served on the concerned member with an opportunity to defend his case in writing and also in person to the committee. Each notice should be served on the concerned member with an

interval of thirty days. After the expiry of thirty days period of the final notice, the committee shall consider the reply, if any, received from the concerned member in its meeting and three- fourths of the members of the committee present and entitled to vote at the meeting, shall approve the proposal for expulsion and pass a resolution.

(2) Subject to the provision 86 of the Act a co-operative housing society, which has been allotted land, before expelling a member shall give final opportunity by publishing the notice in the leading Hindi and English newspaper in the National Capital Territory of Delhi informing the affected member to be present in person or through the authorized representative before the Registrar on the date fixed for the final hearing. (3) The Registrar shall decide the expulsion case within the period of one hundred eighty days from the date of the receipt of the resolution for expulsion of a member from the cooperative housing society and shall convey his decision in writing to such member. If the resolution of the co-operative housing society for expulsion of a member is not approved by the Registrar within the said period of one hundred eighty days, the resolution for expulsion of the member shall be deemed to have been approved and the committee shall convey this decision of expelled member and the Registrar within a period of thirty days after the expiry of one hundred eighty days time limit through the registered Post. If the approval of the deemed expulsion is not conveyed to the members and the Registrar within the above period of thirty days, thereafter, the resolution of expulsion shall be null and void. (4) Aggrieved member shall have the right to file an appeal to the Tribunal within sixty days from the date of order of the Registrar or intimation of deemed expulsion."

11. To be a member of any Group Housing Society is a valuable right

of such a member and this valuable right cannot be taken away without

strict adherence to the procedure prescribed under the Act and Rules

framed therein. Prior to the enactment of the Delhi Cooperative Societies

Act, 2003 the procedure for expulsion of a member was provided under

Rule 36 of the Delhi Cooperative Societies Rules, 1973. There was no

deeming clause either in the statute or under the rules prior to the

enactment of the Act. The present Act and Rules provide for "deemed

expulsion" under Section 86(3) and Rule 99 (3), respectively. Now

dealing with Rule 36 of the Delhi Cooperative Societies Rules 1973, the

Division Bench of this Court in the case of R.K. Aggarwal v. Registrar

Cooperative Societies, Delhi & Anr. in LPA No.97/1983 decided

on29.07.1991, took a view that Rule 36 has to be strictly complied with

and adhered to by a Cooperative Society before it chooses to expel a

member. It further held that Rule 36 is not directory and it is incumbent

upon the society to follow the letter of law and to meticulously comply

with the provisions of Rule 36 of the Delhi Cooperative Societies Rules

1973. The relevant paras of the said judgment are reproduced as under:

"By removing the name of a person from the membership, a valuable right is taken away from him. Moreover, the consequences of expelling a member are serious as is evident from perusal of sub-rule (5) of Rule 36, which provides that when a member is expelled, he cannot be re-admitted to the membership of that Society, at any point of time and nor can he become a member of any other society of the same class for a period of three years from the date of such expulsion. Grave consequences, therefore, ensue when a member is expelled.

Under these circumstances, Rule 36 has to be strictly complied with and adhered to by a cooperative society before it chooses to expel a member. We are not in agreement with the learned

Counsel for the respondents that Rule 36 is directory. In our opinion, it is incumbent upon the Society to follow the letter of law and to comply meticulously with the provisions of rule 36. This admittedly has not been done in the present case. Even if it be assumed though it is denied by the appellant that show cause notices dated 10th August, 1974 were served on the appellant, the infirmity is not cured. The notice was required to be of not less than 30 days before but not such notice was given. The learned Single Judge did not advert to this requirement of Rule 36 and has merely proceeded to decide the question as to whether the notice dated 10th August, 1974 was served on the appellant or not. Having come to the conclusion that the notice dated 10th August, 1974 was served on the appellant, the learned Single Judge should have then proceeded to decide whether such service fulfilled the requirement of Rule 36 or not. In our opinion, the laudatory requirement of 30 days as provided by Rule 36(2) was not fulfilled. Therefore, the action taken by the respondent society was non est."

12. It cannot be disputed that in every society the defaulter member

puts the society to ransom, because, it is due to the default of such

members that the entire project is delayed at the cost of others who

regularly pay their share as per the demand raised. However, it is equally

true that neither the society, nor the Registrar Cooperative Societies can

arbitrarily expel any member of the society without strictly following and

adhering to the procedure laid down under Section 86 of the said Act and

Rule 99 of the said Rules.

13. In Jai Kishan Khanna since deceased through LR Rajeev

Khanna v. Shantnu Appt. Coop Group Housing Society Registration

No.1111, W.P. (C) 2900/2014, decided on 22.05.2014, a Division Bench

of this Court while dealing with these provisions, held that Sub-section

(3) of Section 86 of the Act stipulates that on the receipt of the resolution

for expulsion, the Registrar shall take cognizance of the said resolution

within 30 days and pass a final order either approving or rejecting the

proposal for expulsion within a period of 180 days. The Court also took

the period of 180 from the date of issuance of the letter sent by the

society seeking explanation of a member and to count 180 days period

from the said date. Relevant para of the said judgment is reproduced as

under:

"Sub-Section (3) of Section 86 stipulates that on the receipt of the resolution for expulsion, the Registrar shall take cognizance of the said resolution within 30 days and pass a final order either approving the expulsion or rejecting the proposal for expulsion within a period of 180 days. The said provision further stipulates that if the matter is not decided by the Registrar within the aforesaid period, the expulsion of such a member shall be deemed to have been approved. The period of 180 days from the issuance of the letter dated 19.08.2013 expired on 15.02.2014 and immediately thereafter, on 28.02.2014, the petitioner filed the appeal under Section 86(4) read with Section 112 of the said Act. Sub-Section (4) of Section 86 clearly entitles any party aggrieved by the order of the Registrar or "deemed approval" of expulsion, as the case may, to file an appeal within 60 days from the date of such order. The starting point of limitation of the deemed approval of expulsion would have to be reckoned from the date on which the period of 180 days expired. In the present case, the said period expired on 15.02.2014."

14. Under Section 86 (3), the Registrar has to take cognizance of such

resolution within 30 days and this 30 days period will commence from

the date when the resolution for expulsion has been received by the

Registrar. After the cognizance is taken by the Registrar then the

Registrar has to pass a final order either approving the expulsion or

rejecting the proposal for expulsion within a period of 180 days, however,

if the matter is not decided by the Registrar within a period of 180 days

then expulsion of such a member shall be deemed to have been approved.

For better appreciation, the ingredients of Section 86 (2) & (3) of the Act

can be enumerated as under:

i. There is a receipt of resolution for expulsion in terms of Section 86 (2) of the Act.

ii. Registrar shall take cognizance of such resolution within a period of 30 days, iii. Registrar shall pass a final order either approving the expulsion or rejecting the proposal for expulsion within a period of 180 days and iv. If the matter is not decided by the Registrar within the aforesaid period of 180 days, the consequence is that the expulsion of such a member shall be deemed to have been approved.

15. As can be seen from the clear and unambiguous language used in

the said Section of the Act, the total period envisaged in the said section

is 180 days during which the Registrar has to pass a final order either

approving the expulsion or rejecting the proposal for expulsion and, if for

any reason, the Registrar fails to take any decision, then the necessary

consequence is that the expulsion of such a member shall be deemed to

have been approved. The period of 30 days which has been prescribed for

taking cognizance on the resolution for expulsion is not a period over and

above the period of 180 days but the same is inclusive of the period of

180 days. It is during this period that the Registrar must apply his mind

and take cognizance and it is not left to the choice or wish of the

Registrar to take cognizance as and when he so wishes to do so. Rule 99

of the said Rules also clearly envisages that the Registrar shall decide the

expulsion case within a period of 180 days from the date of the receipt of

the resolution for expulsion of a member from the Cooperative Housing

Society and if the same is not approved by the Registrar within a period

of 180 days, the resolution for expulsion of a member shall be deemed to

have been approved and the committee shall convey its decision to the

expelled member and the Registrar within a period of 30 days after the

expiry of 180 days time limit through the registered post. Rule 99 (3) is

also in conformity with section 86 (3) of the said Act, as here also the

maximum period for Registrar to take decision on expulsion is 180 days

and therefore, a combined reading of the said provisions makes the

position explicitly clear that the mandate of the law is that it is incumbent

upon the Registrar to take cognizance on the resolution for expulsion

within a period of 30 days and to decide either way on such a request

within a period of 180 days.

16. Reverting back to the facts of the case, since the Registrar failed to

take cognizance on the resolution of expulsion sent by the Petitioner-

Society within a period of 30 days as envisaged under Section 86 (3) of

the Act, therefore, the impugned order dated 03.03.14 passed by the

learned Tribunal remanding the matter back to the Registrar Cooperative

Societies for a fresh decision as per law with a further direction that a

period of limitation of 180 days shall be computed from the first date of

hearing before the Registrar Cooperative Societies, is set aside.

17. We also hold that the said direction given by the learned Tribunal

for computing the period of limitation of 180 days from the first date of

hearing before the Registrar Cooperative Societies is ex-facie illegal and

violative of Section 86 (3) of the Act.

18. In so far as the order dated 10.04.2012 passed by the Registrar

Cooperative Societies is concerned, the same shall also not sustain in the

absence of cognizance taken by the Registrar Cooperative Societies

within the period of 30 days as envisaged under Section 86 (3) of the Act.

19. We accordingly set aside the impugned order dated 03.03.2014

passed by the learned Tribunal and also the order dated 10.04.2012

passed by the Registrar Cooperative Societies.

20. The Writ Petition is accordingly disposed of.

21. No order as to costs.

(KAILASH GAMBHIR) JUDGE

(I.S.MEHTA) JUDGE MAY 29, 2015 v